Court: Retailer GhostBed hid deep relationship with reviewer
Hit Where It Hurts
Part of a burgeoning online bed-in-a-box mattress market, Purple Innovations is considered an up-and-comer in the industry. Like many of its peers, Purple’s lack of conventional showrooms means that the brand lives or dies based on its online reputation.
In January 2017, honestmattressreviews.com (HMR) went online. Owned and operated by Ryan Monahan, the site began taking shots at Purple Innovations in negative reviews on the site. The claims were fairly serious, including an alleged link between materials used by Purple Innovations and incidents of cancer. In addition, the site reviewed Purple Innovations products poorly, while other mattress companies, including competitor GhostBed, fared well.
Throughout, HMR maintained that it was entirely independent.
Purple Innovations wasn’t so sure. The company filed a complaint in late February 2017, alleging a thick packet of grievances, including ”false advertising and false association under the Lanham Act and Utah common law, tortious interference with economic relations, defamation, trade libel and injurious falsehood, civil conspiracy, and violation of the Utah Truth in Advertising Act.”
Key to the complaint was Purple’s assertion that the website’s claims of independence were malarkey and that Monahan was, in fact, in bed with GhostBed (sorry – couldn’t resist).
Drama ensued. Purple moved for an ex parte temporary restraining order to keep HMR from making further false claims about the company. The court denied the TRO but later granted it on March 2, when it determined that the defendants seemed to be avoiding service of process. The very next day, Purple moved to hold HMR in contempt, claiming that the site was not abiding by the temporary restraining order.
GhostBed CEO Mark Werner joined Monahan in filing declarations reiterating their independence – maintaining that Monahan had never held a position at GhostBed, had never been a member of GhostBed’s marketing team and had never had so much as an email address issued by GhostBed. Monahan and GhostBed’s counsel reiterated these claims in a hearing held in mid-March.
On the basis of these assertions, the court dissolved the restraining order. But in a further dramatic twist, Purple returned in late June 2017 with a surprise declaration from one Calisha Anderson, former director of marketing at GhostBed. Anderson’s declaration contradicted Monahan, Werner and GhostBed’s assertions, and she claimed that she had very little actual authority for GhostBed’s marketing and that Monahan was the real director of marketing.
The entire mess wound up in an evidentiary hearing the following September. After listening to Werner, Monahan and Anderson, the court “found the testimony of Ms. Anderson to be credible and persuasive, and … not seriously challenged by cross-examination.” About a month later, Purple moved for sanctions against the defendants, arguing that their “willful misrepresentations prejudiced Plaintiff’s case and interfered with [the] proceedings.”
In February 2018, this rather dramatic phase of the suit came to its close, with the court finding that the defendants had substantially interfered with the judicial process and granting the plaintiff’s motion for sanctions against GhostBed. The court also struck down GhostBed’s counterclaims, awarded Purple attorneys’ fees and noted that it would “also issue an adverse jury instruction if deemed appropriate when this case goes to trial.” However, the court must still consider the defendants’ motion to dismiss, which was filed on Jan. 23, 2018, so there is sure to be more drama from these two competitors.